All Things Financial breaks down a rule of thumb in the popular book, The Millionaire Next Door. I haven’t read the book, and I know I should, but the rule of thumb just doesn’t seem to work for me. I’m a huge fan of statistics and formulas (one of the reasons I like Baseball Mogul), but this one doesn’t seem to up to snuff.
According to the math a 22-year old just out of college making $65,000 (what some engineers can probably make in Boston), should have a net worth of $143,000. More than likely, the poor person probably has some school loans to pay and is in the negative. I’m a very frugal person. I’m about 100K less than where I should be according to the formula. There were a few years where I was unemployed which is definitely a factor. However, I’m still just 8 years out of college and I’m supposed to have around a quarter million saved?
I think I’ll have to work on a formula that just takes into account only the working years.